Centogene N.V. (NASDAQ:CNTG) Q2 2020 Earnings Conference Call - Final Transcript
Sep 23, 2020 • 08:00 am ET
drove the difference. A lower revenues contribution from the Pharma segment compounded this impact, decreasing our gross profit by EUR1 million in H1 2020 compared to the previous year. Cost of sales increased as sum of the fixed cost elements of the two segments were higher than those in 2019. Our R&D expenses were up by EUR1.7 million, which is reflective of our continued commitment to rare disease patients. Despite the impact of the COVID-19 pandemic, we made a conscious decision to continue carrying out the execution of our long-term strategy to support rare disease patients.
General admin expenses increased by roughly EUR4 million for two main reasons: The first is higher costs as a result of being a public company such as the D&O Insurance. The second is upfront costs associated with our COVID-19 testing efforts, such as internal employees testing to keep our company operational as well as the upfront costs of increasing testing capacity. There was also a roughly EUR1.4 million increase in other operating expenses. We took the impact of the COVID-19 pandemic and the potential disruption to different businesses into consideration when assessing credit risk, particularly relating to the Diagnostics segment. As a result, credit loss allowances on trade receivables increased by approximately EUR1.2 million compared to H1 2019.
Now, please turn to Slide 17. Let us have a closer look at the cash flow and balance sheet. Cash flow used in operating activities increased compared to the same period last year due to the slower revenue growth of our core business and additional purchases of inventories in response to the COVID-19 pandemic. Cash flows from investing activities represent investments in laboratory equipment and intangible assets, and increased by EUR3 million in H1. The cash flow from financing activities reflects the repayments of loans, lease liabilities and interest payments. As of June 30, 2020, we had EUR17 million of cash and cash equivalents. Regarding our debt outstanding, I would like to remind you that this value includes EUR22 million of lease liability. In addition, we raised additional capital through a follow-on offering in July that I will elaborate on in the next slide.
Please turn to Slide 18. We raised additional capital through a follow-on offering in early July. As you will see on our balance sheet, we have enough cash reserve for the foreseeable future. Nonetheless, given the unprecedented nature of the COVID-19 pandemic and the associated uncertainties, we believe it to be prudent to further strengthen our balance sheet. Hence, we added EUR24 million to our cash reserve in July. This speaks to the resilience of CENTOGENE's team. In addition to strengthening our balance sheet, this offering increased the number of free floating shares on the NASDAQ substantially. We believe that this will potentially attract and enable more new investors to take an interest in our company.
Please turn to Slide 19. Now, let us share our perspective on the full year 2020 performance outlook. As mentioned previously, COVID-19 has impacted us significantly